Message from the CEO
Letter to Shareholders
Successful year, delivering on strategy
As the world’s leading cocoa and chocolate company, we have been focusing on generating sustainable long-term value for our shareholders and all other stakeholders. The successful past year reflects the strength of our strategy and the quality of our ‘smart growth’ execution.
Fiscal year 2016/17 in brief
- Sales volume up +4.4%, significantly above the market growth
- Sales revenue of CHF 6.8 billion, up +1.2% in local currencies
- Operating profit (EBIT) up +22.3% in local currencies, of which +17.8% recurring; significant contribution from Global Cocoa
- Net profit up +39.6% in local currencies, of which +31.3% recurring
- Strong free cash flow of CHF 475.6 million, supported by low cocoa prices
- Mid-term guidance1 confirmed and extended until 2018/19
- CFO Victor Balli to retire; Remco J. Steenbergen to succeed him effective March 1, 2018 (see separate press release)
- Board members Andreas Schmid and Wai Ling Liu will not stand for reelection; Elio Leoni Sceti proposed as new Board member
- Proposed payout to shareholders of CHF 20.0 per share, up +29%
- On average for the 4-year period 2015/16 to 2018/19: 4-6% volume growth and EBIT above volume growth in local currencies, barring any major unforeseen events.
+22.3% in local currencies
+39.6 in local currencies
Free cash flow
+10.9% in local currencies
Payout ratio = 36.3% (+29.0%)
Strong top and bottomline growth, driven by strategic partnership
Region EMEA (Europe, Middle East, Africa) delivered a strong volume growth well above the market. Western Europe had a very good year and Eastern Europe saw a strong rebound of its business. Significant investments were made to cater for future growth.
+9.8% in local currencies
Solid performance, strong margin improvement
Region Americas delivered a solid year with very strong profitability and double-digit volume growth in Brazil and the Andean region.
+9.2% in local currencies
Region Asia Pacific
Double-digit top and bottom-line growth continues
Region Asia Pacific had a very strong year with double-digit growth, fueled by the execution of GarudaFood long-term supply
agreement, and solid growth of Food Manufacturers and Gourmet & Specialties.
+20.2% in local currencies
Cocoa Leadership project delivering on expectations
The successful implementation of the Cocoa Leadership project led to the significant improvement of operating profit (EBIT), supported by more favorable conditions in the cocoa products market.
+272.6% in local currencies
What we do
We are the world’s leading manufacturer of chocolate and cocoa products, mastering every step in the value chain from the sourcing of raw materials to the production of the finest chocolates.
Barry Callebaut aims to outperform the global chocolate and cocoa market. This ambitious long-term strategy is based on four pillars:
The highlights in fiscal year 2016/17
These are the highlights in fiscal year 2016/17 along our four strategic pillars - Expansion, Innovation, Cost Leadership and Sustainability:
Thousands of Specialty & Decorations products available to our customers
Expanding our Specialties and Decorations business
To accelerate our growth in Specialties & Decorations, we acquired D’Orsogna Dolciaria and concluded an agreement to acquire Gertrude Hawk Ingredients in 2017. Both companies are bolt-on acquisitions that enrich our product portfolio with a unique set of capabilities and strong credentials in their home markets.
“Our Specialties & Decorations business plays a key role in adding value for our customers and delivering on our ‘smart growth’ strategy.”
Antoine de Saint-Affrique, CEO Barry Callebaut
10 years to create Ruby chocolate
Uncovering the fourth type of chocolate
We uncovered Ruby chocolate, considered to be the fourth type of chocolate besides Dark, Milk and White chocolate. Building on our 175 years of expertise in sourcing and chocolate making, our R&D centers in Belgium and France as well as in collaboration with Jacobs University, a unique process was developed, releasing the Ruby chocolate's natural flavor and color characteristics of this bean.
About 6,000 customers targeted through “My BC” portal
Better customer experience by going digital
Cost leadership one of the reasons why many customers outsource their production to us. But we want to support our customers beyond cost leadership. This is why we set out on a journey to become the undisputed leader in multichannel customer experience: With Salesforce, we introduced a cloud-based platform that enables us to make all customer interactions more efficient, drive digital transformation and - most importantly - improve our customers' experience in Europe.
157,000 farmers trained
“None of us can do it alone!”
With Forever Chocolate, we aim to tackle the structural changes in the chocolate supply chain and make sure that we can enjoy chocolate forever. In order to achieve our bold four targets, we want to lead a movement of like-minded companies, governments, and NGOs.
In 2016/17 we made clear progress towards our targets, like: +23% productivity increase for farmers receiving our productivity packages; 36% of our cocoa is now sustainably sourced, the same goes for 30% of our non-cocoa ingredients.
In Asia we employ 1,700 people across 9 sites
Building homegrown talents in Asia Pacific
Asia Pacific (APAC) is one of our fastest growing regions. To reach our leadership ambition in this region, we aim to accelerate the growth of our talent pipeline by tapping into and developing our incredibly rich and diverse Asian talent pool.
Our talent acceleration program supports our employees’ career progression by providing a tailor-made career path, training and mentorship opportunities. With this, we develop our APAC homegrown talents that will drive the future of our business.
Our plan to make sustainable chocolate the norm by 2025
Barry Callebaut is a company with a purpose. We believe that business should re-invest its knowledge and resources into the greater society in which it operates. Sustainability is embedded in our company’s growth strategy, alongside Expansion, Innovation, and Cost Leadership.
In November 2016, we launched Forever Chocolate, our plan to make sustainable chocolate the norm by 2025. Forever Chocolate’s ambition goes beyond sustainable cocoa. It is the next step in our long history of investing in a sustainable supply chain. Under Forever Chocolate we have made four bold commitments to be achieved by 2025:
We will report annually our progress against these four targets. Our first progress report will be published on December 7, 2017.
Cocoa beans sourced through sustainability programs
Farmers trained on good agricultural practices and child labor awareness
Chairman's Award 2017
Chairman's & Value Awards 2017
The Chairman´s Award recognizes employees who have been with Barry Callebaut for a number of years and have demonstrated outstanding performance at work, as well as a strong commitment to their local communities. They are individuals who embody our company values.
The Value Award recognizes managers and their teams who are willing to go the extra mile, who are putting all their passion into their work and, thus, have made a positive impact on the company in the past fiscal year. The Awards were given for each of our five company values: customer focus, passion, entrepreneurship, team spirit and integrity.
Barry Callebaut is fully committed to good Corporate Governance. Our principles and rules are laid down in the company's Articles of Incorporation, the Internal Regulations of the Board of Directors and the Charters of the Board Committees. We have prepared our Corporate Governance Report in accordance with the principles of the Directive Corporate Governance (DCG) issued by the Swiss Stock Exchange SIX.
Board of Directors
- Patrick De Maeseneire, Chairman
- Jakob Baer, Vice Chairman
- Fernando Aguirre
- James (Jim) Donald
- Nicolas Jacobs
- Wai Ling Liu (until December 13, 2017)
- Timothy Minges
- Andreas Schmid (until December 13, 2017)
- Juergen Steinemann
The Board proposes Elio Leoni Sceti for election as new Board member.
Change within continuity in the Executive Committee
After serving eight and eleven years on the Executive Committee of Barry Callebaut, respectively, David (“Dave”) S. Johnson, CEO & President Americas since 2009, and Victor Balli, Chief Financial Officer since 2007, expressed the desire to retire.
Effective September 1, 2017, Dave Johnson handed over his function to Peter Boone, Barry Callebaut’s Chief Innovation & Quality Officer and member of the Executive Committee since 2012. Pablo E. Perversi who had served Unilever for nearly 24 years, was appointed as successor to Peter Boone.
Furthermore, with Ben De Schryver, President Asia Pacific, a representative of the younger generation was promoted to member of the Executive Committee effective September 1, 2017.
Victor Balli will stay in his function until February 28, 2018. Remco J. Steenbergen, serving Royal Philips for about 20 years, has been appointed as new Chief Financial Officer and member of the Executive Committee, effective March 1, 2018.
Always on the pulse of time, with untiring energy and the highest degree of integrity, Dave Johnson and Victor Balli have had a major contribution in shaping Barry Callebaut to what it is today: a global leader in chocolate and cocoa.
The Board, the Executive Committee, and all employees would like to warmly thank Dave and Victor and wish them well for their future.